T.C. Summary Opinion 2008-108
UNITED STATES TAX COURT
CHARLENE DONIA STRINZ, n.k.a. CHARLENE MONTOUR,
Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
CHARLENE D. STRINZ, n.k.a. CHARLENE MONTOUR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 20179-05S, 897-06S. Filed August 25, 2008.
Charlene Montour, pro se.
Robert V. Boeshaar and Jessica Yu, for respondent.
GERBER, Judge: These cases1 were heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
1
Docket No. 20179-05S concerns the 1995 and 1996 tax years
and docket No. 897-06S concerns the 1994 tax year for petitioner.
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when the petitions were filed.2 Pursuant to section 7463(b), the
decisions to be entered are not reviewable by any other court,
and this opinion shall not be treated as precedent for any other
case.
Petitioner sought relief from joint and several tax
liability for 1994, 1995, and 1996. She applied for relief under
section 6015(b), (c), and (f), and respondent, in determinations,
denied such relief. Petitioner timely petitioned this Court for
review of respondent’s determinations.
Background
Petitioner, at the time of filing her petitions, resided in
the State of Washington. She filed joint returns with her former
husband3 for 1994, 1995, and 1996. For each year the return was
prepared by a professional preparer and reflected a balance of
tax due. Petitioner earned a small amount of wages each year
from her work at her husband’s construction company, but the
underpayments were, in substantial part, due to income reported
on Schedules C, Profit or Loss From Business, for the
construction company. Petitioner was responsible for the
household bills and expenditures during the years in issue.
2
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue.
3
For convenience, petitioner’s former husband will be
referred to as her husband.
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When the 1994, 1995, and 1996 returns were filed, petitioner
was aware of the couple’s financial difficulties and that they
were having a hard time paying their living expenses. Because
she worked at her husband’s construction company, she was also
aware of its financial situation and that it was also having
trouble paying its obligations. Petitioner and her husband had
filed for bankruptcy and their unpaid tax liabilities for 1991,
1992, and 1993 were discharged, but the 1994, 1995, and 1996 tax
liabilities were not qualified for discharge.
Petitioner separated from her husband during 1995 and
obtained a final divorce effective December 31, 1997. Although
separated, petitioner and her husband continued to file joint
returns throughout the years at issue. After the separation,
petitioner showed her husband’s girlfriend how to run the
administrative office of the construction business. Those duties
included handling financial matters, typing contracts, buying
office supplies, and related duties. In connection with the
divorce, petitioner’s husband had made an oral promise to pay the
Federal income taxes, but he did not keep his promise. There was
no legal obligation under the divorce decree for payment of the
income tax liability. Petitioner’s husband did not force her to
sign the returns or intimidate her in such a way that she signed
under duress.
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Petitioner filed for relief from joint and several
liability. Respondent’s determination was that she was not
entitled to relief under section 6015(b) or (c) because the
assessments were based on underpayments of tax reported due.
Respondent also reviewed all of the factors to be considered for
relief under section 6015(f) and determined that she was not
entitled to equitable relief.
Discussion
Section 6015(b) and (c) provides for relief from joint and
several liability in situations where there is an understatement
of tax or a deficiency in tax, respectively. Because these cases
involve underpayments of tax reported on joint returns,
petitioner is not entitled to relief under either section 6015(b)
or (c).
Section 6015(f) gives the Commissioner discretion to grant
relief from joint and several liability if, taking into account
all of the facts and circumstances, it is inequitable to hold an
individual liable for any unpaid tax and relief is not available
under section 6015(b) or (c).
As directed by section 6015(f), the Commissioner has
prescribed guidelines in Rev. Proc. 2003-61, sec. 4.03(2), 2003-2
C.B. 296, 298, which lists the eight nonexclusive factors that
the Commissioner will consider in determining whether, taking
into account all the facts and circumstances, it is inequitable
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to hold the requesting spouse liable for all or part of the
deficiency, and full or partial equitable relief under section
6015(f) should be granted.
These nonexclusive factors include whether: (1) The
requesting spouse is separated or divorced from the nonrequesting
spouse; (2) the requesting spouse will suffer economic hardship
without relief; (3) the requesting spouse did not know or have
reason to know that the nonrequesting spouse would not pay the
income tax liability; (4) the nonrequesting spouse had a legal
obligation to pay the outstanding liability; (5) the requesting
spouse received a significant benefit from the item giving rise
to the deficiency; (6) the requesting spouse has made a good
faith effort to comply with income tax laws in subsequent years;
(7) the requesting spouse was abused by the nonrequesting spouse;
and (8) the requesting spouse was in poor mental or physical
health when signing the return or requesting relief. Rev. Proc.
2003-61, sec. 4.03(2), further provides that no single factor
will be determinative, but that all relevant factors will be
considered.
The Appeals officer determined that the first and sixth
factors were in petitioner’s favor, the second and third were
against her, and the fourth and fifth were neutral. With respect
to the seventh and eighth factors, the Appeals officer determined
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that petitioner was not abused and no special consideration
arises from petitioner’s mental and physical health.
We will now consider whether there was an abuse of
discretion in the denial of relief on the basis of the above-
listed relief factors. After trial and the opportunity to
consider petitioner’s testimony, it appears that the Appeals
officer was correct in the analysis of the eighth factor. There
is no question about whether petitioner was separated or divorced
and about her subsequent compliance, and so these factors weigh
in her favor.
With respect to economic hardship, petitioner is currently
employed and she has not established economic hardship. In that
regard, petitioner and her husband were relieved of 1991, 1992,
and 1993 income tax in an amount approaching $200,000 during
their bankruptcy proceeding. This factor weighs against
petitioner.
On the basis of petitioner’s testimony, it is clear that she
had reason to know that her husband would not pay the taxes
reported on the returns as she was aware of the internal
operations of his business and their personal inability to pay
their bills. Accordingly, this factor weighs against petitioner.
Although petitioner’s husband had made an oral promise to
pay the tax liabilities, there was no enforceable legal
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obligation to do so. It was reasonable for the Appeals officer
to treat this factor as neutral.
It is not clear that petitioner received a significant
benefit from the fact that there were tax underpayments, but it
is likely that she and her husband lived on the receipts of the
business, although the taxes were unpaid. Again, it was
reasonable for the Appeals officer to treat this factor as
neutral.
Finally, petitioner’s husband was prone to overindulge in
alcohol and may have used abusive language, but petitioner was
not influenced or intimidated by his actions and these conditions
did not play a factor in petitioner’s choice to sign joint
returns. There has been no showing that petitioner’s mental or
physical health should play a role in the consideration
of whether she should have been granted relief under section
6015(f).
In view of the foregoing, we hold that respondent’s refusal
to grant petitioner relief from joint and several liability for
the 1994, 1995, and 1996 tax years was justified.
To reflect the foregoing,
Decisions will be entered
for respondent.